Examining Australia's falling solar PV rooftop prices

The drop in the price of solar power systems has been noted internationally.

Lower module prices have led to a huge uptake of the power source, and the prices of installations and necessary components have come down as well.

To determine the largest factors driving this cost decline, the US Department of Energy recently worked with the Lawrence Berkeley National Laboratory, and together the two agencies uncovered an extremely complex environment that ultimately is benefiting solar installations.

Australia was identified as an extremely unique situation. The country has seen one of the largest drops in solar panel prices anywhere in the world, and this, coupled with generous government incentives, led to massive installation rates over the past few years.

Germany is currently the only country to offer solar packages cheaper than Australia, while the cost is about the same in Italy. Interestingly, Germany and Italy also have two of the largest solar networks anywhere in the world.

The report suggested that areas with widespread use of solar, like Germany and its 32 gigawatts of solar PV capacity and Italy with 16 gigawatts, will have the lowest prices because of "soft costs" found in the installation phase.

These costs include labour, parts other than the module, permits, fees and similar expenses.

The Australian anomaly

Although Australia boasts similar installation prices as Germany and Italy, it has nowhere near the solar capacity of these countries, with 2.2 gigawatts online by the end of 2012.

"Those differences in soft costs may, in turn, be partly attributable to differences in the cumulative size of each market, on the theory that larger market size allows for price reductions through learning-by-doing and economies of scale," the report explained.

However, the authors were quick to point out that Australia is a clear indication that the falling prices that have been seen around the world were influenced by more than just market size.

Regardless of why, exactly, solar prices have fallen so low in Australia, it has certainly benefited the country's green campaign. Considering the country receives about 10,000 time the amount of energy it consumes every year – 58 million petajoules of solar radiation – from the sun, it makes sense to harness this power.

As more new projects go online, officials expect Australia's electricity grid to look remarkably different by 2030.